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In a landmark case highlighting the government’s intensifying focus on customs fraud, the U.S. Department of Justice (DOJ) has reached a $54.4 million settlement with Ceratizit USA LLC, marking the largest customs fraud settlement in False Claims Act history.
Announced on December 18, 2025, the settlement resolves allegations that the tungsten carbide products distributor knowingly evaded customs duties on goods imported from China. The whistleblower who exposed the scheme is expected to receive approximately $9.75 million from the settlement proceeds.
The case, United States ex rel. Stover v. Ceratizit USA, et al., filed in the Eastern District of Michigan, accused Ceratizit of orchestrating a sophisticated scheme to avoid paying duties on tungsten carbide, a material widely used in manufacturing cutting tools. From August 2020 through March 2024, the company allegedly transshipped Chinese-manufactured products through Taiwan before bringing them into the United States.
By falsely declaring to U.S. Customs and Border Protection (CBP) that the goods originated in Taiwan rather than China, Ceratizit reportedly evaded significant Section 301 tariffs that specifically target Chinese imports. The settlement also addresses allegations that the company misclassified products by using incorrect Harmonized Tariff Schedule codes and failed to properly mark merchandise with its country of origin.
The Ceratizit case represents what investigators refer to as a “trifecta” of customs fraud: transshipment, misclassification, and marking fraud – all serious violations of U.S. trade laws designed to protect domestic industries and ensure fair trade practices.
This settlement arrives just months after the DOJ’s August 29, 2025 launch of a cross-agency Trade Fraud Task Force, which combines resources from DOJ’s Civil and Criminal Divisions and the Department of Homeland Security. The task force was specifically designed to combat the type of evasion alleged in the Ceratizit matter.
Trade and customs experts note that while customs fraud cases have long been pursued under the False Claims Act, recent years have shown a significant increase in such actions. This trend is expected to accelerate under the current administration’s protectionist trade policies, which have reimposed and increased tariffs on numerous imported goods.
The Ceratizit case demonstrates the critical role whistleblowers play in exposing customs fraud, which often involves complex international supply chains that are difficult for regulators to monitor effectively.
“Customs duty collection relies heavily on voluntary compliance,” explained a former CBP official who requested anonymity. “Similar to our tax system, importers are expected to properly classify goods and pay appropriate duties, but oversight is imperfect. This creates opportunities for fraud that might go undetected without insider information.”
Corporate insiders and others with knowledge of tariff evasion can provide government investigators with crucial evidence of wrongdoing that would otherwise remain hidden. The substantial $9.75 million whistleblower award in this case serves as a powerful incentive for future whistleblowers to come forward.
Industry analysts predict the Ceratizit settlement will embolden both the DOJ and potential whistleblowers. With the Trade Fraud Task Force now fully operational and increased duties on numerous goods creating greater incentives for evasion, experts anticipate more False Claims Act investigations targeting importers attempting to circumvent the tariff system.
The tungsten carbide market, valued at over $16 billion globally, has been particularly affected by trade tensions between the U.S. and China. As a key component in manufacturing cutting tools, drills, and industrial equipment, tungsten carbide’s supply chain has become a focal point for both legitimate trade concerns and illicit evasion schemes.
As the DOJ continues to prioritize customs fraud enforcement, companies engaged in international trade face mounting pressure to ensure full compliance with all import regulations or risk severe financial penalties and reputational damage.
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11 Comments
Interesting that the whistleblower is set to receive nearly $10 million from this settlement. That’s a significant payout, but it likely took a lot of courage and effort to expose this fraud. Kudos to them for doing the right thing.
I’m curious to learn more about the specific tactics Ceratizit used to falsely declare the origin of their goods. Were there any red flags that should have been caught earlier? Hopefully this case leads to improved customs enforcement and auditing procedures.
That’s a good point. Enhanced oversight and auditing processes could help prevent these types of fraudulent schemes in the future. Identifying the vulnerabilities in the system is key to closing loopholes.
It’s concerning to see the lengths that Ceratizit went to in order to evade customs duties. This kind of behavior distorts the market and puts legitimate businesses at a disadvantage. I hope this record-breaking settlement serves as a wake-up call for the industry.
Wow, this is a massive customs fraud case! $54.4 million is an eye-watering settlement. It’s good to see the DOJ cracking down on these types of schemes that try to avoid tariffs and duties. Hopefully this will serve as a strong deterrent for others.
As a shareholder, I’m glad to see the DOJ taking strong action against this customs fraud. It’s important for companies to play by the rules and pay the proper duties. This settlement should send a clear message that such behavior will not be tolerated.
Agreed. Upholding fair trade practices is crucial for maintaining a level playing field. This case highlights the need for robust enforcement to ensure all companies are held accountable.
Customs fraud is a serious issue that can undermine the integrity of international trade. While $54.4 million is a substantial penalty, I hope the DOJ continues to aggressively pursue and punish companies that try to cheat the system.
This case shines a light on the complex schemes some companies will use to avoid paying tariffs. It’s a good reminder of the importance of supply chain transparency and the need for strong customs enforcement. Kudos to the whistleblower for coming forward.
Absolutely. Whistleblowers play a vital role in exposing these types of fraudulent activities. Their willingness to come forward and cooperate with authorities is crucial for holding companies accountable.
Transshipping Chinese goods through Taiwan to evade tariffs is a pretty sophisticated scheme. It’s troubling to see companies going to such lengths to avoid paying their fair share. Glad the DOJ was able to uncover and put a stop to this fraud.